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Read MoreThe best time is after you have received a formal Loan Estimate from a lender but before you have locked your rate. This is when you have the most leverage. You can also try to negotiate after a rate lock if market rates have improved significantly, but lenders are not obligated to adjust a locked rate.
Recasting is an excellent strategy in specific situations, such as:
You receive a large sum of money (e.g., inheritance, bonus, or sale of an asset).
You want to lower your monthly obligations but have a low interest rate you don’t want to lose by refinancing.
You want a simple, low-cost way to adjust your mortgage after a significant principal paydown.
Yes, lenders require you to have homeowner’s insurance to protect their investment.
It typically covers damage to the structure of your home and your personal belongings from events like fire, theft, or storms.
It also provides liability coverage if someone is injured on your property.
Remember, standard policies do not cover floods or earthquakes; you’ll need separate policies for those.
1. Pre-approval: Determine your budget and get pre-approved.
2. Find a Property & Contractor: Get a signed contract with a licensed contractor and detailed cost estimates.
3. Submit Full Application: Provide all required documentation, including the contract and project plans.
4. “As-Completed” Appraisal: The appraiser determines the future value of the home.
5. Underwriting & Approval: The lender reviews and approves the full loan package.
6. Closing: You sign the final loan documents.
7. Renovation Begins: Work starts, and funds are disbursed to the contractor in stages after inspections.
8. Project Completion: A final inspection is done, and any remaining funds in the contingency reserve are applied to the loan principal.
The best time to lock your rate depends on market conditions and your personal risk tolerance. Many borrowers choose to lock once they have an accepted purchase offer and have selected a lender. It’s a good idea to discuss timing with your loan officer, who can provide insight into current market trends.
